Exam 1: Accounting and the Business Environment

Michael Company has just completed operations for the year ended December 31, 2018. This is the second year of operations for the company. The following data have been assembled for the business. Accounts Payable \ 12,200 Office Expense \ 6,500 Accounts Receivable 14,500 Rent Expense 9,600 Cash 8,200 Retained Earnings, Jan. 1, 2018 8,300 Common Stock 9,000 Salaries Expense 36,000 Dividends 13,500 Service Revenue 84,000 Equipment 15,000 Utilities Expense 6,200 Insurance Expense 4,000 Prepare the income statement. Use a proper heading.

A corporation's board of directors is elected by the chairperson of the company.

The total assets and the total liabilities of Atlas Financial Services are shown below. The company issued no common stock and paid no dividends during the year. Total Assets Total Liabilities Beginning of year \ 405,000 \ 295,000 End of year 455,000 305,000 What was the amount of net income for the year?

Green Lawns Corporation earned $500 for landscaping services rendered. The customer promised to pay at a later time. Which of the following accounts increased as a result of this transaction?

Outside investors ordinarily use financial accounting information to decide whether or not to invest in a business.

The guidelines for accounting information are called Generally Accepted Accounting Principles (GAAP).

Jones Supply Services paid $350 cash, the amount owed from the previous month, to a materials supplier. Which of the following accounts decrease?

Match the accounting position to the job description. -Certified Management Accountant

Marcus has decided to open an auto-detailing business. He will pick up an automobile from the client, take it to his parents' garage, detail it, and return it to the client. If he does all of the work himself and takes no legal steps to form a special organization, which type of business organization, in effect, has he chosen?

A debt that a business owes is called ________.

The primary objective of financial reporting is to provide information useful for making investment and lending decisions.

List three private groups that work with the Financial Accounting Standards Board (FASB).

Mutual agency of the owners is not present in a corporation as it is in a partnership.

The statement of retained earnings informs users about how much of the earnings were kept and reinvested in the company.

Following is a list of account balances of Lincoln Lawn Services as of December 31, after the first year of operations. Accounts Receivable \ 6,000 Accounts Payable 5,000 Salaries Expense 7,000 Repairs Expense 900 Truck 11,000 Equipment 12,000 Notes Payable 26,100 Cash 20,000 Supplies Expense 200 Service Revenue 32,000 Gasoline Expense 7,200 Salaries Payable 1,200 Calculate the net income.

Which of the following is a characteristic of a limited-liability company (LLC)?

The earnings of a sole proprietorship are ________.

International Financial Reporting Standards are comparatively more specific and more rule-based than U.S. GAAP.

International Financial Reporting Standards ________ U.S. Generally Accepted Accounting Principles.

Springer Corporation had the following transactions in August: Earned $2,000 of revenues on account; collected $4,000 from a customer for services provided last month; incurred $600 of repair expense and paid cash; paid $200 for rent that it owed from the previous month. What is the net income in August?